South Korea launches $19 billion incentive package for chip sector

South Korea has announced a substantial $19 billion incentive package to boost its chip industry, aiming to give a significant advantage to major players like Samsung Electronics Co. and SK Hynix Inc. as they navigate an increasingly competitive landscape.

The 26 trillion won program includes 17 trillion won in financial support for specific investments and additional tax incentives, according to a statement from the presidential office. This package is more than double the 10 trillion won initially proposed by Finance Minister Choi Sang-mok less than two weeks ago. The announcement led to a roughly 1% rise in shares for both Samsung and SK Hynix.

Learn how to trade stocks and popular assets with Top Forex brokers in South Korea

This unprecedented investment comes in response to global calls for supporting local chip industries. Countries from the US to China are investing heavily to attract and advance manufacturing projects by companies like Taiwan Semiconductor Manufacturing Co. and Intel Corp. This surge in spending is intensifying amid rising tensions between Washington and Beijing, which threaten the supply chain of critical components used in modern devices and military equipment.

Traditionally, South Korea has relied on private conglomerates such as Samsung and SK to spearhead investment efforts in the chip sector. However, the government is now taking a more proactive role, spearheading plans to establish a mega-cluster of chip plants near Seoul.

This latest package marks the largest single investment in the chip industry by the South Korean government to date. Officials plan to finalize the details of the initiative by June.